The oil services firm Wood Group has emerged as a potential takeover target after the company sold a division to the US group GE for £1.7bn, raising the prospect of a flurry of deals in the booming sector.

Shares in Wood Group closed the day up almost 14%, making it the second biggest riser in the FTSE 250 in a flat market. Analysts said that the sale of the Aberdeen-based company's well support unit made the group a better fit with its British rival Amec.

The rising oil price and companies' plans to spend more on exploration and production have led to a spate of takeovers in the oil services sector. GE, which has a war chest of about £20bn, bought the British company Wellstream for $1.3bn (£812m) in December.

Keith Morris, an analyst at the stockbroker Evolution Securities, said: "We are at a stage in the oil services cycle where things in the medium term look pretty good. If you've got cash and are thinking about buying something, better to buy now than wait when share prices will be higher."

Another analyst who did not want to be named said: "Amec might feel that they might be missing the boat as the industry moves towards further consolidation."

Shares in other oil services companies also rose after Wood Group, which has a market of £3.3bn, announced the sale. Weir Group closed up 4% and Petrofac gained 2.5%.

Wood Group said that it will now focus on big engineering projects such as giant floating storage and production platforms. Oil companies need increasingly complex and vast pieces of infrastructure to exploit reserves that are hard to reach

Allister Langlands, chief executive, said that the company was particularly interested in beefing up its presence in Brazil, which has vast oil reserves buried in offshore "sub-salt" deposits, and also in developing Canada's oil sands.

It was reported earlier this month that Wood Group had put the well services division, which employs almost 4,000 people around the world, up for sale. About half the division's revenues come from providing submersible electric pumps, which boost production from mature fields. The rest comes from well-support drilling services for companies looking for oil and gas, in particular US shale gas companies. But these revenues are volatile as it depends on how many wells companies are drilling, which is usually based on oil prices. Analysts said the division was sold for "significantly" more than expected, with GE keen to expand its new oil and gas business.

Langlands said: "We are working with customers on new significant projects. In 2007 and 2008 everyone was concerned about the ability to keep up with demand. People are starting to focus on that again … and raising exploration and production spending."

Morris added that it made sense for service companies to consolidate as the level of investment and complexity in new projects rises. This trend will be accelerated by the BP's Gulf of Mexico disaster last year, which has already resulted in more stringent regulations in the US. "Big companies have more wherewithal to withstand anything which the industry can throw at them.

"Projects are getting bigger and more expensive and you have to be able to show you can follow through with them."

About a third of Wood Group's total 29,000 global workforce is based in the UK. In 2009 the group made just under a quarter of its revenues from providing services to companies in the North Sea. Langlands added that this would rise in the short term following the sale of the well support unit and the recent acquisition of Scottish rival PSN for £600m.

But over the longer term, revenues from the UK would fall as the group's overseas activities grew, although it would remain its home market he said.